RIM Earnings Preview: All About BlackBerry Shipments

RIMM: Research In Motion logo
Research In Motion

Research in Motion (NASDAQ:RIMM) disappointed the market in its last earnings announcement that missed expectations. It registered around $4.9 billion in revenues when consensus expected revenues of closer to $5.4 billion for the last quarter. [1] RIM plans to announce its fiscal year Q2 2012 earnings on September 15th as its fiscal year ends on February 28th. RIM competes with other smartphone manufacturers like Nokia (NYSE:NOK) and Apple (NASDAQ:AAPL).

The earnings results and the outlook for the rest of the year will help shape our $43 price estimate for RIM stock, which is about 40% above market price.

All About BlackBerry Shipments

As shown in the above chart, we expect RIM to ship around 12 million BlackBerry smartphones for Q2 continuing with the decline in BlackBerry shipments that it experienced for the first time in Q1.

We expect RIM to slightly increase its sales in FY Q3 2012 this year to 12.4 million as it could benefit from the holiday season when consumer spending is at its peak. However for Q3, RIM will have other competitive dynamics to consider as Apple (NASDAQ:AAPL) is expected to announce the introduction of the iPhone 5 and Nokia (NYSE:NOK) will introduce smartphones based on Microsoft (NASDAQ:MSFT) Windows Phone 7 platform.

The positive factor for the company in the next quarter is that it will benefit from an expected ban on certain Samsung smartphones from almost all of Europe (see Will Samsung’s Loss Translate to RIM’s Gains in Europe?).

Could it beat our forecast for Q2?

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For this quarter, we believe the results will depend on the extent of success that RIM achieved through the recently released BlackBerry 7 based smartphones.

There have been a few conflicting reports on the uptake of BlackBerry 7 by consumers. Some brokerage firms like Sterne Agee and Macquarie Securities are bullish on BlackBerry 7 prospects (see Upgrade Gives RIM’s Stock Life, QNX Still the Key) while Jefferies and others are bearish about its prospects for the quarter. [2]

See our complete analysis for RIM stock here

  1. RIM FY Q4 2011 earnings conference call transcript, SeekingAlpha, March 25th, 2011 []
  2. RIM: Jefferies Returns To Sell; QNX BB Being Rushed?, Barron’s, September 9th, 2011 []